Telegram’s Durov Strikes Back | SEC May Derail FTX Repayment Plan

The executive issued his first public statement since he was detained.

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Nina Bambysheva Staff Writer, Forbes Money & Markets
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Steven Ehrlich Director, Forbes Digital Assets
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DUROV BREAKS SILENCE

In his first public statement since being indicted by French authorities, Telegram founder Pavel Durov took to his own platform to push back against what he called “misguided” allegations. Responding with a mix of gratitude and criticism, Durov rejected the idea that Telegram is an "anarchic paradise" and argued that prosecuting him personally is a move straight out of a legal time warp. “If a country is unhappy with an internet service, the established practice is to start a legal action against the service itself. Using laws from the pre-smartphone era to charge a CEO with crimes committed by third parties on the platform he manages is a misguided approach,” he wrote.

He also announced the first updates to the social media platform since his arrest last month, including the removal of features he said are linked to illegal activity, pledging to revamp the company’s heavily criticized lax moderation.

Durov was indicted in Paris on August 28 on multiple charges, including complicity to spread child abuse images and traffic drugs, as well as failure to comply with law enforcement. After posting a $5.5 million bail, he was placed under court monitoring and is not permitted to leave the country. With Telegram boasting nearly a billion global users, Durov blamed the platform’s “growing pains” for allowing criminals to exploit its systems. Telegram-affiliated TON cryptocurrency was trading at $4.7 on Friday afternoon in New York, 12% down since last Friday.

SEC SAYS IT COULD CHALLENGE FTX REPAYMENT PLAN

The U.S. Securities and Exchange Commission (SEC) isn’t thrilled with FTX’s proposal to repay creditors in stablecoins. In a filing last week, the agency reaffirmed its authority to “challenge transactions involving crypto assets,” even when those assets, like stablecoins, are pegged to the U.S. dollar. This move could further complicate the bankrupt crypto exchange’s efforts to return funds to its creditors.

Earlier this year, FTX put forward a plan to repay up to $16.3 billion to users locked out since the platform’s November 2022 collapse. Many creditors were hoping for in-kind payments, aiming to recapture cryptocurrencies’ impressive 122% gains since the implosion. However, FTX’s liquidation plan calls for settling claims in cash or stablecoins, pegged to the dollar value at the time of bankruptcy.

The SEC’s stance introduces a layer of regulatory uncertainty that could further delay payouts or complicate how funds are distributed. This echoes the agency’s involvement in the Voyager Digital bankruptcy, where a judge chastised the regulator for failing to clarify its objections.

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CURRENT PRICE OF TOP 5 COINS (7-Day % Change)

Coin

Price

Percent Change

Bitcoin (BTC)

$53,570

9.5%

Ether (ETH)

$2,216

11.4%

Tether (USDT)

$1.00

0.0%

Binance Coin (BNB)

$481

9.5%

Solana (SOL)

$125

7.9%

Sources: Forbes Digital Assets, CoinGecko. Prices as of 4:23 p.m. on September 6, 2024.

FED RATE CUTS: A BOON FOR BITCOIN, A BLOW TO THE DOLLAR?

Zach Pandl, head of research at Grayscale Investments, the world’s largest crypto asset manager, shared his take on how looming Fed rate cuts might send bitcoin soaring while putting the dollar under pressure. Pandl also dissected the market’s sharp August decline, offering valuable insights into whether another dip could be on the horizon as the Fed dials back its restrictive stance. For a deeper dive into Pandl’s take on the Fed’s policy shift and its potential impact on both traditional and digital markets, check out the full interview here.

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